How to make your business more diverse

A lot of successful businesses have multiple sources of income, and the benefits of diversification have really emphasized due to the recent pandemic shutdowns. Now when many business owners begin to re-emerge from the COVID-19 blockade, concerns regarding futureproofing are discussed. How can you ensure your business to be successful once the borders are shut? Does your previous offering fit into the new normal? Perhaps most important, how can you be ready should we be forced to go into lockdown again? The answer may lie in business diversification.

Why should you diversify?

This is something experts have observed unfolding in the first quarter of the year known as 2020.

Business diversification, is a method to decrease your risk when operating in an unpredictable economic environment. It’s a sign that you have a back-up plan should things go wrong.

Diversification protects you not just from shocks that aren’t anticipated, such as COVID-19 as well as from common issues like when new competitors crop up.

There are many diversification opportunities to choose from, but plenty to consider before you decide to dive with both feet.

We don’t suggest to anybody that you embark on a journey to do something outrageous, like investing massive amounts of money in something that you’re not familiar with. However, if they think about their current business environment and experience, they will find that there are always other areas that they’re not necessarily in and that offer huge potential for them, because it’s still within their comfort zone.

Getting started

Before beginning your journey into diversification, it’s essential to do your research.

Know where you’re going and who your rivals are especially if you’re entering into a market that isn’t yet established.

If, for instance, you’re making machinery for the food industry, then the best place to go to might be for consumables. In a good economic environment, the machinery will be selling however, in a not that good economy, as right now, people are still purchasing the consumables.

In the event that you do not have knowledge of the market you’re trying to enter then you’re like driving down the highway with a blindfold on.

It is recommended to stay with what you’re familiar with particularly if this is your first time trying your toes in the diversification pool.

If you’re looking to diversify into a market that’s outside your business expertise or skills, then you need to consider hiring someone with the experience. We’re all adept at certain things and not so good in other areas. Therefore, you should hire employees with the expertise and experience you need. If you’re not able to do that then you’re adding to the risk.

Risks to consider

Diversifying your business means diversifying your attention.

Your aim is to satisfy your customer and grow the number of customers you serve. The problem with diversifying your company is that you’re using manpower on your new offering. If you’re not cautious, you’ll will end up spending all your resources on new opportunities and leave the existing ones in place.

It’s crucial to ensure you’re satisfied with the customers you already have and growing that customer list.

Don’t bite off more than you’re chewing.

Take your time to complete this. I’ve seen thousands of businesses over the years that have gone broken because of doing an unwise thing… even the most reputable, well-known ones.

That’s the difficulty of being a small business owner, he says. You have similar problems like big companies, but less funds to react to and learn from your mistakes, so you have to be extra cautious.

Any business change or investment in business is very risky. However, there are some good risks and make some very smart decisions, earn yourself a lot of cash and make it successful… when you’re prepared.

Finding opportunities

Diversification was a must for some businesses like a gelato producer that operates principally as a wholesaler to restaurants and sellers of gelato. However, in February of this year, it was beginning to notice problems appearing that were looming.

"I did not really believe it would affect us much, but I did see the news from outside the United States"

But then one of their major customers, whose business relied heavily on tourists from overseas had stopped taking orders.

At this stage they were a week into lockdown and realised they needed a diversification plan for them to survive.

"I began looking for other businesses we could invest in that might complement what we do"

"I discovered a different business which was actually supplying supermarkets. I began working on buying part of the company during lockdown, and eventually bought half of the business."

This move didn’t just create a new customer base. It also gave the company to expand their business.

"Their manufacturing was handled by a third-party contractor. Thus, by purchasing it, we’ve bought their manufacturing contract"

"If we enter another lockdown or something happens that’s not the end of the story, but we’ve got the grocery side of the business which will continue."

It was the perfect way for a business to take an opportunity to grow on its strengths that its already has.

It can feel like a do-or-die scenario. However, over-reacting to situations could be detrimental in the end.

"Part of the issue is that, when people get out of the woods, they make the wrong decisions. Particularly, now with the impact of COVID-19," the doctor declares. "So my suggestion is to get some non-emotional advice from someone who isn’t tied to your business.

"If you’re struggling emotionally or financially, and you’re feeling stressed and piled up, then go and get help. Take the phone and talk to someone. There are plenty of intelligent people around who could assist, so don’t try to do the whole thing by yourself."